This entry-level accountancy and tax package is aimed at unincorporated non-VAT registered small  businesses and sole traders.  It is especially useful for people just starting their business journey.


It is estimated that at the start of 2021 there were 5.5 million small businesses (defined as 0 to 49 employees), forming 99.2% of the total number of UK businesses. The largest grouping of these small businesses in the building sector, where it covers skilled workers, male or female, such as carpenters, masons, plumbers, painters, plasterers, glaziers, thatchers, etc.

Most are:

  • businesses with annual sales of less than £85,000
  • not trading as limited companies but as sole traders or, occasionally, partnerships
  • not registered for VAT
  • not employing more than one or two people
  • usually wanting a “no-frills” accountancy and taxation service, i.e. they’re not interested in monthly or quarterly management accounts or in apps that provide budgets or cashflow forecasts, but they do want to know as soon as possible how much tax they need to pay each year
  • quite happy to manage their day-to-day bookkeeping themselves using the online resources from Xero with only the very occasional reference to their accountant

The problem

Many unincorporated small businesses are just awakening to the fact that as from 1 April 2024 they are going to be caught by MTD for ITSA (an acronym for Making Tax Digital for Income Tax and Self-Assessment) and, if they have income (not profits!) over £10,000, they will be required by HMRC to make four quarterly digital tax returns every year plus an annual “catch all” one (which at least in most cases will replace the need for an annual Self-Assessment tax return).  Undeniably quarterly reporting is going to be burden on these small businesses, but it is a legal requirement and so must be done.

Many of these small businesses still have not made the move to cloud accounting.  There are many who are still using spreadsheets, which will not be allowed uner MTD for ITSA, and many who are still presenting their accountants with paper records at the end of each period, which is definitely not to be encouraged! 

We have given a lot of thought about how we can help these small businesses with their accounting and taxation needs and show them how to use cloud accounting to their advantage.  As a Xero practice, we always like our clients to be using Xero.  But for the smallest clients the monthly cost of a standard Xero plan is bit of a drawback, and they find these advanced versions of Xero with all their bells and whistles much more complicated than they really need.

The solution

As from 6 April 2022 (tax year 2022/23 onwards) we are offering the Xero Non-VAT Cashbook plan as a low-cost entry-level option to cloud accounting, particularly aimed at unincorporated small businesses.  We see Xero Non-VAT Cashbook as an “incubator” which new start-ups or small clients can use until they grow to the point where they:

  • need to store bills/receipts and invoices online
  • need to account for CIS, either as a contractor or a sub-contractor
  • form themselves into a limited company
  • they need to register for VAT
  • they need budgets and cash flow forecasts
  • they start using apps such as Vend or A2X which need to integrate with the accounting information in Xero.

At that point depending on the circumstances we will either move them sideways to the Xero VAT Cashbook or upgrade them to a Starter, Standard or Premium Plan in Xero.  We hope to help and nurture clients along this business journey but we fully accept that some clients have no intention of expanding and will stay at the “incubator” stage indefinitely.  The Xero Non-VAT and VAT Cashbook plans are only available through accountancy and bookkeeper practices who are members of the Xero Partner Programme.

As this is a stripped-down, no-frills package, we offering it at a stripped-down, no-frills price.  The cost is £54.00 (inc. VAT) a month, with their business year running from April to March each year.

In the first month there is a set-up charge of £60.00 (inc. VAT).

For this low monthly cost our small business clients will get:

  • access to a copy of the Xero Non-VAT Cashbook
  • help with setting this up so it is customised for their business
  • an overnight bank feed to download daily bank transactions from their business bank account into Xero
  • access to online training videos from Xero, especially regarding bank reconciliations
  • annual business accounts made up to 31 March/5 April each year
  • preparation and filing of the owner's annual SA100 tax return
  • if they require it, an online annual accounts review meeting with one of our partners, a fully qualified chartered accountant
  • access to all our online resources, weekly newsletters, and weekly social media postings on taxation, accountancy, and related matters
  • access to our online “Quick 10 Minute Query” services

Additional chargeable services in addition to those listed above would be::

  • A partnership tax return and additional partner tax returns if trading as a partnership
  • Forming a limited company
  • Payroll services and workplace pension administration if employing staff
  • CIS administration if a contractor or sub-contractor
  • Additional telephone and email support from ourselves for Xero
  • More in-depth taxation advice by telephone or email (this is over and above any advice given under the “Quick 10 Minute Query” service)
  • Budgets, cash flow forecasts, etc.
  • Management accounts or similar information

If you want to talk to us about using our "Incubator Package" using the Xero Non-VAT Cashbook, please call us on 01869 222830, or email me at This email address is being protected from spambots. You need JavaScript enabled to view it.

If you like the sound of the incubator package costing from £54.00 inc. VAT a month using Xero Non-VAT Cashbook, you can send us the information we need for preparing a Fee Proposal by clicking here.